Japanese producers in Vietnam may switch to distribution

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Japanese companies may follow Sony in closing their production facilities in Vietnam and investing more in retail and distribution, a trade official says.

Many Japanese firms have focused on production in Vietnam but the new trend is to open retail outlets here to sell products made elsewhere, Yoshida Sakae, director of the Ho Chi Minh City branch of the Japan External Trade Organization, told Tuoi Tre newspaper in an interview last week.

He said the trend will be more visible toward 2015, when a free trade agreement between Southeast Asian countries comes into effect.

Electronic giant Sony has closed its TV factory in Vietnam, moving all production activities to a major plant in Malaysia, Sakae said. The company is now only engaged in selling products in Vietnam; and some other firms may also follow suit and switch to distribution in the next four years.

But Sakae also said many investors have come to Vietnam over the past four months, looking for opportunities to open large factories to supply for the whole regional market. Investors will decide where to locate their production based on the business environment and market size of each country, he added.

Sakae said major Japanese firms are interested in M&A opportunities, citing the recent US$128 million deal between Unicharm and Diana, a leading Vietnamese producer of diapers and sanitary products, as an example.

Japanese investors rank fourth in Vietnam with 1,572 projects and a total registered capital of nearly $22 billion so far, Tuoi Tre reported, citing the Foreign Investment Agency. In the first eight months, 108 new projects of Japanese investors were licensed with a capital of around $642.25 million.

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